Grady Board Approves Lease, despite Unmet Conditions

(APN) ATLANTA — The Fulton-DeKalb Hospital Authority (FDHA) approved in principle a lease agreement 8-1 Monday, January 28, 2008, that will transfer much of its current authority to the Grady Memorial Hospital Corporation (GMHC), a private, nonprofit governing board.

According to the Georgia Secretary of State’s website, Atlanta Progressive News can confirm that the GMHC has officially incorporated, although no officers have been yet appointed. Troutman-Sanders law firm is designated as the registered agent.

FDHA Member Geoffrey A. Heard voted no because he opposed the plan to shift management of Grady Hospital to a private entity in the first place. Chairwoman Pam Stephenson did not vote.

The process is far from over, as several conditions remain unfulfilled.

The Board, which will initially appoint the 16 members to the nonprofit corporation, did not do so Monday but could within a week.

Once those Board Members are chosen, they will have to approve the lease.

Attorney Lewis Horne, who worked on the lease, said Fulton and DeKalb County Commissioners must consent to the lease because each has bond agreements with the hospital.

But he noted both would only have a general consent, not a word-by-word consent, and it would be up to both to decide how to approve.

Fulton County Attorney Gerry Clark said he is recommending Commissioners hold a vote on the agreement.

PUBLIC REMAINS UNCONVINCED

The lease states the GMHC will continue Grady’s Mission as a charity hospital and its “major service lines,” although it does not define what constitutes major service lines.

“If you leave it up to this new Board to define what major service lines are, you leave the door open to cuts,” State Sen. Vincent Fort (D-Atlanta), a leader of the Grady Coalition, said.

Some citizens have been especially concerned the new Board could decide to close its dialysis centers and discontinue other services at Grady that are crucial for Atlanta’s indigent population.

“I have some unreadiness,” Fort said. “How are we going to be sure as a community that services won’t be cut?”

The lease specifies the GMHC must consult with the FDHA prior to cutting any major medical service lines, but an earlier draft of the lease was stronger. It had previously said the FDHA would essentially have veto power over any such cuts.

NO PUBLIC FEEDBACK

Stephenson promised on December 27, 2007, during two public hearings on the first draft of the lease to provide an advanced copy of a final draft before the FDHA voted on it.

Instead, the public received the final draft only minutes before the vote and there was no time allotted for public comment.

Fort called out the Board and requested the public be granted a new public hearing to discuss the final draft.

Trustees balked at the suggestion, but did allow some questions concerning the language of the lease after everyone had received a copy.

Horne said the agreement had gone through several drafts, with changes continuing all the way up until Monday’s meeting.

Those negotiations took place behind closed doors without input from the general public.

STIPULATIONS UNMET

There are several stipulations, not only in the lease agreement, but also in an earlier resolution by the FDHA, which remain unfulfilled.

The Board passed a resolution on November 26, 2007, that authorized the creation of a 501(c)(3) and the preparation of a funding and lease agreement.

However, it outlined several special conditions that must be met before the execution of the lease.

PRIVATE SUPPORT UNVERIFIED

The resolution calls for a written confirmation from the business community for a donation of $200 million for capital improvements to be paid out over four years.

The Metro Atlanta Chamber of Commerce has said for several weeks that an anonymous donor is willing to make a $200 million donation only after Grady makes the transition to a nonprofit.

The identity of that donor remains a mystery and it is unclear if a written confirmation has been provided or if said donor will follow through on his promise.

The resolution also called on the business community to provide written confirmation that they will undertake a campaign to raise another $100 million in private donations over three years.

It is unclear if that confirmation has been provided in writing or if the business community will indeed engage in such a campaign.

The lease agreement states that, as part of a separate funding agreement, the GHMC will be responsible for securing both the $200 million and a commitment to a $100 million fundraising campaign from the business community.

The Chamber has been leading the way in transforming Grady’s management structure and made it clear that money would only arrive to the troubled health system if the FDHA agreed to relinquish control to a 501(c)(3).

STATE SUPPORT UNRESOLVED

The resolution states that the Governor, Lieutenant Governor, and Speaker of the House must each provide written confirmations of their intent to support legislation that would not only secure an additional $30 million in annual funding but also funding for a statewide trauma network.

Each official has stated, like the Chamber, that Georgia would only agree to give Grady additional money after the FDHA turned over control to a 501(c)(3).

The Georgia General Assembly is considering several pieces of legislation concerning Grady this session, including HB 973, which would provide funding for a statewide trauma network through the imposition of a small tax on all telephone and wireless service subscribers.

While this legislation could generate funds for Grady’s Level I trauma center, there is no legislation currently before lawmakers that would give the hospital $30 million in direct, state financial assistance.

EMORY, MOREHOUSE NEGOTIATIONS NOT AGREED TO

As part of the funding agreement, the GMHC must secure from the Medical Schools at Emory University and Morehouse College a commitment to renegotiate outstanding obligations owed by Grady to the schools and the existing medical school contracts.

The resolution said Emory and Morehouse should provide written confirmations to the FDHA concerning these points.

While both schools have publicly expressed willingness to enter into some kind of negotiations, it is unclear how far either school is willing to negotiate or if either has provided written confirmations of their intent.

IRS DETERMINATION OF TAX EXEMPTION UNGRANTED

The GHMC has yet to file Form 1023 requesting the Internal Revenue Service of the US recognize the GMHC as a tax- exempt organization. Atlanta Progressive News called and sent emails to the FDHA and Troutman Sanders law firm regarding this matter, and were told by Mr. Horne on January 7, 2008, the forms have not yet been submitted.

The form requires the organization to provide detailed information on its funding, governance structure, operations, and must show no private partners or other entities are making private gain off of the organization, in order for it to meet tax-exempt criteria adopted by US Congress. It is unclear whether the GMHC decided on enough of those issues to be ready to submit such an application.

The IRS must provide this written determination before the lease can take effect. Horne said that form has yet to be filed on behalf of the GMHC and does not know how long it would take the IRS to provide the determination.

About the author:

Jonathan Springston is a Senior Staff Writer for Atlanta Progressive News and may be reached at jonathan@atlantaprogressivenews.com.

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